“The retail market is demonstrating resilience with vacancy rates around 5%+, though with geographic disparities where suburban markets like Fairfax County, Alexandria, and Manassas outperforming downtown DC,” Gould said. “While Downtown retail foot traffic has rebounded somewhat thanks to return-to-office, it is still below pre-pandemic levels, which is affecting urban retail performance.”
Industrial and data centers are also thriving. He notes that due to the AI boom, data centers in Northern Virginia are among the nation’s leaders. Low vacancy rates are also boosting the industrial sector.
“Industrial is performing exceptionally strong with warehouse vacancy rates of just 3.7%, driven by e-commerce demand and low supply,” he said. “Investment demand is high. Strong performance is also driven by DC’s strategic location, with access to Baltimore’s deep-water port and high-income consumer base.”
Downsizing hurting office sector
While the return-to-office mandate might have brought some workers back to office spaces, the massive federal layoffs and terminations have kept the sector struggling.
“Office is struggling with record-high vacancy rates, facing federal downsizing, flight-to-quality trends, and office conversion projects,” Gould said. “Investment activity remains cautious with focus on distressed opportunities. The federal government’s reduction in office space is reshaping the market fundamentally.”